FSCS protection limits change

Over the past few days I have been receiving a number of letters & emails informing me that the FSCS protection limits are reducing from £85,000 to £75,000 after the 1 Jan 2016.

Now I have been looking at this with regard to my cash accounts but I have just received a letter from my pension company stating that this applies to them too. So if my pension account has over £75,000 invested then I will only be covered up to this limit – I wish I had that much in my personal pension account it is hardly reading a 4-digit figure at the moment!

It does make me wonder about the security of any of my personal pension pots and specifically the AVC account that I have been contributing into since my early twenties, it hasn’t reached this limit but does have the potential too before I reach retirement age.

It just seems to be another hammer blow on pension saving. If you have over £75,000 in a pension account, well done and a brilliant achievement, but if you want to spread the risk and secure its value because you still have some years until you retire, you will need to transfer some to another company – oh and have the hit of transfer fees ?

If the reason you are transferring is due to the reduction in the FSCS protection limit then this should be permitted free of charge! Oh – and the final comment – “We recommend you speak with a financial adviser” so yet another fee to pay.

My bank has said that if I wish to move money due to FSCS changes, I can do so without penalty even if the money is held in accounts that have withdrawal charge clauses. Why aren’t the pension companies offering a similar option?

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6 thoughts on “FSCS protection limits change

  1. The pension company that you transfer to usually pays the transfer fees up to a certain amount a typical e.g. is if you have a pension pot of £20k or more, then they’ll pay the fees up to £500. This has been the case for many years.

    In re. speaking to an adviser, at least now there are no sneaky commissions for various products since things are moving to the fee-paying model. At the point of access it feels like you’re getting a raw deal sometimes, but I feel it is a fairer, more transparent system than some IFA taking a sneaky 5% of every fund you buy…

    Interestingly, I’ve not received any letters or otherwise about the new limits… I’m many years from FI and retirement though, so maybe my paltry pension account is not worth their bother of a stamp!

    • I was forced to transfer a pension recently – (there was no transfer charge – just an extortionate admin fee – which meant I lost a third of its value!) and at no point during this was anything mentioned by the receiving company about assistance with transfer costs?
      One I need to find out about if I want to consolidate any of my meager pension accounts. 🙂

      • Crikey! Definitely something to look into then. As I mentioned, the typical offer is for pensions of something like £20k or more they would pay up to £500 of the exit fees. One sneaky trick i thought of was to combine my funds into one (if you’re on a fee-free dealing plan) and then you’ll only have one fund to transfer. Since the brokers tend to charge the fees per line of stock or per fund, then there’d only be one to be charged against

    • Just goes to show how risky pension saving is. To make a pension grow and support you, forecasts push for £100k+ pot sizes and yet you can only get cover for £50k.
      No risk avoidance or mitigation possible unless you ‘divide’ and accept the lower growth.

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